Reference no: EM131660635

Question: Dissolution. Clara Mahaffey operated Mahaffey's Auto Salvage, Inc., in Dayton, Ohio, as a sole proprietorship. In 1993, Kenneth Stumpff and Mahaffey's son, Richard Harris, joined the firm. Stumpff ran the wrecker and bought the vehicles for salvage. Harris handled the day-to-day operations and the bookkeeping. They became the company's equal 50 percent shareholders on Mahaffey's death in 2002. Harris, who inherited the land on which the firm was located, increased the rent to $1,500 per month. Within two years of Mahaffey's death, and without consulting Stumpff, Harris raised the rent to $2,500. Stumpff's wife died, and he took a leave of absence, during which the company paid him $2,500 a month and provided health insurance. After two years, Harris stopped the payments, discontinued the health benefits, and fired Stumpff, threatening to call the police if he came on the premises. Stumpff withdrew $16,000 from the firm's account, leaving a balance of $113. Harris offered to buy Stumpff's interest in the business, but Stumpff refused and filed a suit in an Ohio state court against Harris. A state statute permits the dissolution of a corporation if the owners are deadlocked in its management. Should the court order the dissolution of Mahaffey's? Why or why not?